Karnataka HC grants Interim Stay on Mantri Developers' CIRP amidst Loan Default Controversy

The Karnataka High Court has granted a temporary stay to the Corporate Insolvency Resolution Process (CIRP) initiated against Mantri Developers Pvt. Ltd.

Mantri Developers Pvt. Ltd. is a real estate development company which is a part of the Mantri Group of Companies, has been granted a temporary halt to the Corporate Insolvency Resolution Process (CIRP) initiated against it by the National Company Law Tribunal (NCLT), Bengaluru. The High Court of Karnataka granted an interim stay on the CIRP for a period of three weeks amidst a loan default controversy.

The CIRP was started by the NCLT after the company defaulted on loan repayments to Indiabulls Housing Finance Limited, which had sanctioned a loan of Rs. 579,20,00,290/- for the development of projects such as 'Mantri Centrium' and 'Mantri Webcity' in Bengaluru, Hyderabad, Pune, and Chennai.

The Financial Creditor filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, over a default of Rs. 456,68,73,538/-. The National Company Law Tribunal (NCLT) admitted the petition under Section 7 of IBC and appointed Mr. Ahsan Ahmad as the Interim Resolution Professional (IRP) to handle the proceedings.

In response, Sushil Mantri filed an appeal with the National Company Law Appellate Tribunal (NCLAT), while also filing a writ petition with the High Court of Karnataka seeking a stay on the CIRP proceedings. He argued that the Resolution Professional would take over the management of the company if it was not protected during the NCLAT proceedings.

The High Court of Karnataka granted the interim stay on the CIRP for a period of three weeks, with the next hearing scheduled for 20.04.2023. This decision has brought temporary relief to Mantri Developers Pvt. Ltd., which is engaged in the business of real estate development and has various residential, retail, and hospitality projects in multiple cities across India.

The controversy surrounding the loan default and subsequent CIRP has sparked concerns about the state of the real estate industry in India, which has been hit hard by the COVID-19 pandemic. Many companies in the sector are struggling to complete projects on time and generate revenue, leading to a rise in loan defaults and insolvency proceedings.

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